2025 Encryption US Stocks Summer: Madness, Premiums, and Risks

In the summer of 2025, encryption in US stocks became the true protagonist of the capital market. MicroStrategy's stock price soared by 208.7%, far exceeding tech giants like Meta and NVIDIA. A group of strategically held US and Japanese stocks staged a valuation myth, with metrics such as market value/net asset value premium (mNAV), borrowing rates, and short positions triggering intense battles among traders.

The Mystery of Premium

The mNAV premium index has become an important metric for measuring these companies. In the second half of 2024, MSTR's mNAV premium hovered around 1.8 times, with some trading days even reaching a historical peak of 3.3 times. In the first half of 2025, the mNAV index fluctuated between 1.6 and 1.9 times.

Quant trader Butter believes that a 2-3 times premium is reasonable for MSTR. He observed that MSTR's stock price fluctuations are usually 2-3 times that of Bitcoin. Another trader, Hikari, combines options strategies by selling put options in the low premium range and selling call options at high premiums.

Convertible Bond Arbitrage

Hedge funds prefer convertible bond arbitrage. By buying MSTR convertible bonds and simultaneously borrowing an equivalent amount of common stock to short sell, they lock in a delta-neutral position. Each time the stock price fluctuates significantly, they can profit by adjusting the short ratio. This is regarded as one of the most sophisticated arbitrage games on Wall Street.

Short Selling Risks and Squeeze Possibilities

Although many institutions publicly express bearish views on companies like MSTR that hold cryptocurrency, the short-selling risk for ordinary investors is quite high. Hikari has "suffered losses" from shorting MSTR. He suggests that if one wants to short, they should prioritize buying put options and other strategies with limited risk.

As for whether there will be extreme short squeezes similar to GameStop, the three traders have basically the same opinion: it is difficult for large-cap companies like MSTR to happen, but small-cap targets like SBET are more likely. The key is to look at indicators such as the borrowing rate and the number of shares available for borrowing.

The Future of Holding Stocks with Cryptocurrency

As more and more companies follow the MSTR strategy of holding coins, market differentiation is becoming evident. Longxin Salt believes that only companies that truly grow larger and stronger, and have the ability for continuous financing, can enjoy high premiums. Those limited-scale "small players" find it difficult to replicate the valuation myth of MSTR.

Hikari stated that many emerging holding companies are actually replicating the MSTR model, and some are "just here to scam money." He is currently only focused on a few assets that have clear disclosures and legitimate core businesses in the US stock market.

No matter how the market changes, the three traders believe that the most scarce and consensus-driven aspect of the encryption market is still Bitcoin itself.